Only 17% of sustainability leaders in Asia-Pacific’s finance sector are in C-suite: report

FINANCIAL institutions (FIs) in the Asia-Pacific are lagging their global counterparts in appointing sustainability leaders in their highest levels of management, according to a report by consultancy company Russell Reynolds Associates (RRA) released on Friday (Jun 3).

Based on its data, only 17 per cent of sustainability leaders in FIs in the Asia-Pacific are in a C-suite position, much lower than the global average, where 50 per cent of FIs’ sustainability leaders have a seat at the helm.

“This has implications for a sustainability leader’s scope and depth of influence across the organisation if they lack the direct connection and seniority to interface with business unit leaders and other C-suite members,” stated the report, which analysed the backgrounds of senior sustainability leaders from 84 major FIs headquartered in this region.

The data also found that 37 per cent of FIs’ sustainability leaders in Asia-Pacific came from a finance and reporting background, which is the second-most common experience behind sustainability and corporate social responsibility (CSR) at 54 per cent.

Only 17 per cent of their global counterparts had finance and reporting experience.

“Asia-Pacific’s financial institutions place heavy emphasis on financial rigour when it comes to ESG (environmental, social and governance) initiatives. It is even clearer that Asia-Pacific sustainability leaders over-index on finance experience when compared to their global counterparts,” according to the report.

The proportion of sustainability leaders in Asia-Pacific’s FIs having finance and reporting experience is even higher among those in a C-suite position. While 52 per cent of them have finance and reporting experience, only 32 per cent of sustainability leaders who are not in the management bench came from a similar background.

“The focus on finance and reporting could be a direct result of Asian countries implementing mandatory disclosures in recent years as a way to push companies towards sustainability – as evidenced from disclosure of ESG data increasing in all Asian countries and sectors over the past 10 years.”

As sustainability issues gradually become an existential priority for FIs in Asia-Pacific, RRA said it expects to see a new breed of sustainability leaders emerging.

It is likely that future sustainability leaders will move up the ranks to take on a management position.

RRA found that the best FIs tend to have a senior sustainability leader sitting on the executive committee and reporting directly to the chief executive officer.

While Asia-Pacific FIs have not elevated their sustainability leaders to this level, the report stated that this is likely to change within the next decade, or even earlier.

As for the issue of talent, RRA said that 67 per cent of leaders appointed in the last 5 years have sustainability experience, an increase from 50 per cent among those appointed before the last 5 years.

Data also suggested that FIs are increasingly looking to fill sustainability roles through external hires. The overall number of external hires has gone up by 44 per cent year on year in the last 3 years. They are much more likely to have a background in sustainability or CSR compared to employees who are internally promoted, as they tend to come from a finance background.

“Since next-generation leaders with sustainability expertise will most likely be found externally, we expect competition for external talent to heat up dramatically,” according to the report.

RRA has also begun to see a broader range of experiences among FI sustainability leaders in the region over the last 5 years.

This includes those with experience in corporate strategy, business and product leadership, as well as marketing and communications.

“Rather than just report on sustainability results, (future sustainability leaders) will be a strategic thinker who can help shape the sustainability strategy of the company and work cross-functionally to gain buy-in from various business units and functions and embed the strategy across the organisation,” the report noted.